Brazil’s soybean production may exceed U.S. production

There is a good chance that Brazil will be the world’s largest soybean producer during the 2012/13 season. A big part of the reason for this is that the U.S. crop was reduced by drought. But Brazil’s production has been gaining on U.S. production for years and at some point Brazil’s output will exceed the U.S. output even in years when yields are near trend.

Farmers in Brazil have been expanding soybean acreage for decades. In 1995/96 Brazil harvested nearly 11 million hectares of soybeans (27 million acres). This year the total is projected at 27.5 million hectares (68 million acres). Brazil’s soybean area has trended up except for a couple of years in the mid-2000s. The gap between U.S. and Brazil production was about 35 million tones in around 1995/96 but the current USDA forecast shows Brazil’s 2012/13 crop 3 million tones larger than this year’s U.S. crop (81 mmt versus 78 million tones). Brazil’s area is still 3 million hectares below that of the U.S., but the yield in Brazil is forecast to be 16 percent higher than the one in the U.S.

Despite the impact of Asian Soybean Rust, Brazil’s soybean yields already match those in the U.S. The trend yield for the U.S. in 2013 is 2.97 tonnes per hectare, compared to the trend yield for Brazil of 3.01 tonnes. At least based on actual yields over the last 12 years, the trend in Brazil passed the trend in the U.S. in 2010.

With high prices Brazil’s soybean area is forecast to increase by 2.5 million hectares this season. However, area was held down in 2011/12 because of low yields. In 2011/12 Brazil’s soybean yield came in nearly 10 percent below the long term trend. The average increase over the last five years is 1.24 million hectares, or a little more than 3 million acres.

Brazil’s soybean exports are also expected to exceed those from the U.S. in 2012/13. This happened once previously, in 2005/06 Brazil’s exports exceeded U.S. exports by 0.33 million tones. This year the advantage is expected to be about 10 times that large. Brazil’s domestic soybean use has been rising at an average rate of 1 million tonnes per year over the last five years, while the U.S. crush has declined over that period.

While the rapid gains in Brazil’s soybean industry are well known, Brazil is also gaining in the corn sector. A decade ago, farmers in Brazil harvested 12 million to 13 million hectares of corn, and produced about 40 million tonnes. This year production will be near 70 million tones on 16 million hectares. Brazil has become a sizable corn exporter, shipping a total of 19 million tonnes in 2011/12, second only to the U.S. This year exports are expected to decline to 16 million tones, but that is still 18 percent of total world trade.

Brazil’s soybean yields are essentially even with, or a little above those in the U.S. However, the yields for corn between the two countries are very different. The 2012/13 corn yield is estimated at about 70 bushels per acre while the trend yield for the U.S. is about 164 bushels per acre. There are several factors that keep the yield relatively low in the Brazil, including the way the sun hits the leaves and the fact that a lot of the corn is doublecropped. However, the data shows that there is considerable room for improvement in Brazil’s corn yields. Argentina’s yields are also well above those in Brazil, coming in near the 120 bushel per acre mark.